IRS audits of millionaires fell in '08
WASHINGTON - Taxpayers who earned more than $1 million dollars were 19 percent less likely to be audited last year than in the previous year, according to a Syracuse University study.
The Internal Revenue Service audited 21,874 millionaires in fiscal 2008, or 1,400 fewer than the year before. At the same time, the number of millionaires filing tax returns rose by more than 50,000, according to IRS figures.
The decline in audits came as the US budget deficit ballooned to $459 billion and is forecast by the Congressional Budget Office to rise to $1.85 trillion this year. In 2008, face-to-face IRS audits of millionaires resulted in recommendations that the taxpayers owed about an additional $200,000, according to the Syracuse study. The additional-tax figure for mail audits was about $136,000, the study said.
"Just a year ago the IRS was boasting that its drive to focus increased attention on those reporting at least $1 million in income was in high gear," said the report by the Transactional Record Access Clearinghouse, a data research center at Syracuse University.
The IRS says its commitment to auditing wealthy taxpayers remains. "Audit rates were down slightly in 2008 due to a variety of factors, including implementing stimulus last year," said IRS spokesman Terry Lemons. "We have a lot more activity going on in the millionaire area than we did years ago."
In 2004,the IRS audited 9,576 of the 190,372 returns filed by millionaires, a rate of 5.03 percent.
Millionaires are twice as likely to be audited as people who earn over $200,000 a year, and more than five times as likely as those who earn under $200,000, the IRS reported.
The IRS data are based on taxpayers "total positive income." Taxpayers who reported more than $1 million in adjusted gross income, which is income offset by some deductions and losses, were even less likely to be audited, with a rate of 4.4 percent, according to the Syracuse data research center.